The Shipping Point

On May 14, Wal-Mart released its first-quarter financials for 2009 and announced that despite the recession -- or, perhaps, because of it -- business was booming. Shoppers in search of cheaper products had been flocking to its stores: A full 17 percent of its customers during the quarter were first-timers. The company had been able to exploit the downturn by reducing its legendarily bare-bones distribution expenses by an additional 5 percent. In keeping with its practice of compelling its manufacturers, shippers, truckers, and warehouses to continually cut costs, Wal-Mart had been able to "sweat the assets" in its distribution network more than usual, said Eduardo Castro-Wright, head of the company's U.S. division.

On the very day that Wal-Mart released its quarterly statement, however, some of those assets announced that they'd be sweated no more. At 2:30 that afternoon, some 200 local warehouse workers, abetted by half a dozen priests and ministers and a number of union activists, paraded up San Bernardino Avenue to the main trucking gate at a Wal-Mart distribution center in Fontana, California -- an obscure Los Angeles exurb that is the epicenter of warehousing not just for Wal-Mart but for the entire U.S.?Asian trade sector. Moments before the demonstrators arrived, Wal-Mart security guards scrambled down the long driveway and rolled the main gate shut, lest the protestors come inside. A Wal-Mart truck, halfway down the driveway on its way to the street, slowed, then stopped.

For the next two hours, the priests prayed, the activists spoke, the workers shouted their demands -- and the distribution center ceased its distributing. Then the county sheriffs carted away the four workers and three priests who had sat down in the driveway, and the demonstrators boarded their buses and left. The unthinkable had happened: Wal-Mart's supply chain had been broken, if only for an afternoon.

The demonstration was an opening shot in a union drive to organize warehouse workers. Devised and run by the Change to Win Federation and backed financially by the Teamsters, it may be one of the more quixotic American organizing campaigns in decades, but it is surely one of the most important. Strategically, the warehouses in the Fontana area present a tempting target to the unions that seek to organize Wal-Mart, its nonunion peers, and the myriad transport and warehouse companies that ship their goods. But the obstacles are considerable, as employers can stall elections and intimidate workers. Their ability to do so will diminish if Congress enacts the Employee Free Choice Act (EFCA) later this year, but even if EFCA passes, organizers will still face a mountainous challenge. A majority of the workers aren't employed by the warehouses but by some of the 270 temp agencies in the vicinity -- a conundrum that virtually compels Change to Win to organize the entire warehouse community.

Forty-three percent of all the seaborne imports into the United States come through the adjacent ports of Los Angeles and Long Beach, roughly 70 miles from Fontana by freeway. Two decades ago, when Asian imports began to dominate American stores, major retailers required warehouses where they could sort and route the products that came into Los Angeles and Long Beach before shipping them to their stores. The retailers needed a minimum of 60 acres per warehouse, but Los Angeles County was too built up to provide that kind of land. Instead, they found what they needed -- room enough for hundreds of warehouses, adjacent to major freeways running in every direction -- around Fontana, an old steel town whose mill had long since closed, situated about two-thirds of the way from Los Angeles to San Bernardino.

The neat, newly built structures, some of them comprising more than a million square feet, now line the boulevards in Fontana and nearby Ontario. The buildings, though huge, are unobtrusive and opaque, devoid of windows and signage. The only way to distinguish among them is by the lines of trucks being loaded onto their docks: Here's a Target warehouse, next door a Home Depot, then a Wal-Mart.

Like the Los Angeles and Long Beach harbors, to which few Angelenos travel, the Fontana warehouse district, which employs roughly 100,000 workers, is one of the key crossroads of the new global capitalist order, where Asian production meets American consumption. Yet it has stolen quietly into the landscape. But for the trucks pulling on and off the freeways (and belching the smoke that makes Fontana the planet's fourth-highest center of diesel particulate pollutants), the warehouses -- individually, in aggregate, and as an industry -- are easy to miss.

"I've been living in Claremont [a college town about a dozen miles away] for seven years," says the Rev. Chris Hartmire, who for decades headed a farm-worker ministry that was at the side of the United Farm Workers in all its battles and who went to Fontana this May to be arrested at the Wal-Mart warehouse's gate. "But I never heard about the industry or the plight of warehouse workers. Nobody knew about this."

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Change to Win discovered the industry and its workers when it began to study the global retail supply chains that have emerged during the past two decades. Over the past several years, the federation's strategists devised an ingenious, complicated campaign -- its success still uncertain -- to organize the truck drivers who move the goods from the Los Angeles and Long Beach harbors to distribution centers, most in or near Fontana. This is no easy task, because the truckers are all independent contractors. Labor strategists identified the next link in the supply chain as the warehouse workers of Fontana, who labor, many for little more than the minimum wage and most without benefits, in what is effectively a one-industry town. Like the port truckers, the warehouse workers are largely Latino, and campaign director Nick Allen estimates that roughly 25 percent to 40 percent of them are undocumented immigrants.

At first glance, Fontana might seem like an organizer's dream. The retailers can't really move their warehouses elsewhere -- there's no other expanse of empty flat land that's both close to the harbors and adjacent to key freeways, rail lines, and an airport. The work force is large, relatively homogeneous, and thoroughly exploited. No wonder that when one key Change to Win organizer first drove around Fontana, passing one massive warehouse after another, he remarked to a colleague, "it's River Rouge," a reference to Henry Ford's great factory on the outskirts of Detroit.

Except it's not. At River Rouge, 100,000 autoworkers were all employed by Henry Ford. In the Fontana warehouse industry, the 100,000 workers not only work for a large number of different employers, but more than half actually are employed by a shifting panoply of temp agencies, even if they've worked at the same warehouse at the same job for many years. The practical and legal obstacles to organizing such workers, at least through a conventional campaign, are daunting. "If all the workers decided that they wanted to join a union tomorrow," acknowledges Jeff Farmer, the organizing director of the International Brotherhood of Teamsters, which is funding the campaign, "they couldn't."

It was only in November, when Barack Obama was elected president and the Democrats won close to a filibuster-proof supermajority in the Senate, that the Teamsters, with visions of EFCA dancing in their head, provided the funds for Change to Win to gear up what of necessity has been a highly unorthodox organizing drive. With workers employed by numerous warehouses and agencies, the organizers have skipped the worksites and gone door to door through the workers' residential communities. (Finding the workers has been made no easier by the region's sky-high foreclosure rate, the third-highest in the nation.) In a number of ways, the campaign in its current phase is closer to community organizing than union organizing, which is one reason why eight organizers from ACORN (the Association of Community Organizations for Reform Now) have come in to help the 30 or so from Change to Win.

The union's goal can't be simply to organize a warehouse, because the warehouse could send out for new workers from temp agencies or the retailer could move its trucks to another warehouse. Organizing temp agencies one by one is futile and legally questionable -- employers would just rely on other agencies, and agencies would insist their employees are independent contractors. So, Farmer says, "this is about creating a movement" -- a concentration of warehouse workers so big and militant that, if EFCA becomes law and diminishes employers' ability to block their workers' unionization, it could win a communitywide contract from the area's employers.

One change that would greatly assist the organizers would be for the federal government to crack down on the scam of "permanent temporary" employees -- workers who are misclassified as temps or independent contractors. Perma-temps report to the same workplace and do the same job day after day. If the Obama administration cracked down on misclassification, businesses would be forced to list most of these warehouse workers -- and millions of others -- as regular employees. Then these workers could not only be organized but unionized.

For now, however, Change to Win's strategy is to enlist the entire community of warehouse workers, perms and temps both, on the theory that a significant disruption of the retailers' supply chains will compel them to come to terms, whatever the workers' classification. It's an all-or-nothing campaign. "You have to build a campaign like the janitors had, that gets and enforces a communitywide contract. We'd want a $15 hourly minimum with health benefits," says Tom Woodruff, who heads the federation's organizing center in Washington, D.C. "You'd have to organize it all -- the whole industry out there. Of course, you'd have to be half crazy to do it."

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A warehouse used to be the place where a company stored its products for weeks or even months. But that was before major retailers, with Wal-Mart always in the lead, began in the 1980s to take advantage of the computerization of sales, production, and logistics to create a steady stream of products that moved in the shortest time possible from a Chinese factory to your local mega-mart. The warehouse whose gate the workers blocked was what is known as a cross-docking facility. On one side, a truck pulls up to the loading dock, hauling what had been a seaborne container that had arrived at the harbor in Los Angeles or Long Beach. Inside the warehouse, the container's contents are sorted electronically and reloaded onto Wal-Mart or Sam's Club trucks parked on the warehouse's other side. They are then driven to specific stores anywhere in a thousand-mile radius.

Speed is at a premium. Homero Lovato, who served as a union monitor at the Wal-Mart demonstration, loads trucks in a nearby warehouse. Together with one other worker, he loads three, maybe four, trucks a day, making $42.50 per truckload. The work, he says, is a constant "rush job," with one worker scrambling to help the other should he fall behind. "If people have to go to the bathroom, they have to wait until the break," he says. "If people get sick, they have to stay on the job."

The ways in which companies like Wal-Mart "sweat the assets" in distribution go well beyond such time-honored ploys as denying workers bathroom breaks. For one thing, Wal-Mart doesn't own many of its own distribution centers, particularly not the giant ones arrayed around Fontana. Neither do Target, Home Depot, Lowe's, or any of the mega-retailers who have flooded into the area. Instead, the warehouses are owned by commercial realtors who lease the facilities to warehouse-operating companies like Exel (a British firm) and Complete Logistics. It is these operating companies that actually run the warehouses and hire the full-time employees. By one recent estimate, however, 53,000 out of the just over 90,000 warehouse workers in the region are temps. Some of the temp agencies are mom-and-pop concerns, but a handful of big agencies, including Select and Staffmark, dominate the market. To run its warehouses in the Fontana area, Wal-Mart tends to rely on Exel, which in turn depends on Staffmark to provide temp workers. Wal-Mart thus avoids any responsibility for the conditions in the warehouses, but by numerous accounts, it takes a very hands-on role in ensuring that goods pass through the warehouses swiftly, efficiently, and at minimal cost.

The savings from this system, which largely pass through the warehouses to the retail chains, are considerable. The area's unionized warehouse workers, chiefly Teamsters employed by UPS or in the cold storage facilities of local supermarket chains, earn about $20 an hour. Before the economy crashed last year, direct nonunion hires who worked in the region's Target distribution centers started at $12.80 an hour and could work their way up to $17 an hour, according to Edna Bonacich and Jake B. Wilson in their 2008 book Getting The Goods: Ports, Labor and the Logistics Revolution. Temps started at $8.50 an hour and could sometimes work their way to $12 an hour -- but that was before unemployment in the region soared to over 10 percent.

For the past five years until January, Clarissa Lua and Blanca Cortes both worked at a warehouse of a nonunion UPS subsidiary -- and for a succession of temp agencies, even though their jobs at the warehouse didn't change. They were making roughly $9.50 an hour processing packages and affixing additional mail labels when necessary. The working conditions left a lot to be desired: When she was six months pregnant, Cortes fainted and fell in the summer heat. (Many of the warehouses lack heating and air conditioning, in a region where summer temperatures routinely rise above 100 degrees. "They wouldn't even buy us a fan," Cortes says.) Then on Jan. 20 they were laid off, replaced by workers to whom the temp agency was paying just $7 an hour. With unemployment rising and the warehouses scaling back, they have been unable to find work since.

Bonacich and Wilson have documented a number of scams that some of the agencies use to reduce their financial obligations. Some workers, they report, have received two checks to cover the amount owed them: one a paycheck, the other a payment for the putative value of their "shares" in the company, on which the agencies contend they are not required to pay employment taxes, unemployment insurance, or workers' compensation contributions.

Warehouse work wasn't always this desperate. "When I started, 15 years ago, I worked for the company [the supermarket chain Pick-n-Save] directly," Lovato says. "There were no temp agencies; the company hired you, put you on 90-day probation, and if you passed, you were a regular employee. But around eight or 10 years ago, they started moving to temp agencies. Now, they give you five-days-a-week work -- or less. You call every morning; they say, you have to come in today -- or, you have to wait."

Olga Romero began working in warehouses decades ago in Los Angeles, where, she remembers, "the work was much better. There were no temp agencies then." But because of the high rates of gang-related violence in her neighborhood, she and her husband packed up their children and moved out to Fontana 15 years ago. In 2004, she stopped work to care for her husband, who'd had a brain aneurysm (he subsequently died). When she went back to work, she discovered she would have to find work through a temp agency.

Lovato's and Romero's impressions of the descent of warehouse employment to low-paid temp work are confirmed by the data. According to a report on the area's logistics industry produced this February by Bonacich and Juan David de Lara, temporary employment in the region grew by a stunning 575 percent between 1990 and 2007. What changed warehousing in Southern California was the rise of China as global producer and America as global consumer and Wal-Mart as driver, shaper, and beneficiary of the change.

It's not easy to find many beneficiaries of this change who actually live in Fontana. According to the Bureau of Labor Statistics, temp workers in the region make an average of $22,237 a year -- provided they work 40 hours a week, 50 weeks a year, which hardly any temp workers do. Since the warehouses generate no retail sales, the municipalities in the region don't collect much revenue -- a civic poverty to which the absence of sidewalks on many of the area's streets clearly attests. The private poverty is no less conspicuous. Some of the greatest concentrations of warehouse workers, says Change to Win's field organizing director, Manuel Roman, are found in trailer parks -- including the one through which we drove, where children played in the makeshift dirt streets. Now, with so many foreclosures in the area, Blanca Cortes says, families are doubling up, sharing their homes, apartments, and trailers with other families.

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The real-time public reaction to the union demonstration at the Wal-Mart warehouse gate was overwhelmingly positive. Honks of support issued forth from most of the non-Wal-Mart trucks that rumbled down San Bernardino Avenue. They mixed with the toots of support from the lonely train engine that plied the track encircling the vast, abandoned Kaiser Steel Mill that stretches for miles on the other side of the street.

Plunked smack in the middle of Fontana's and Ontario's warehouses, the Kaiser Mill stands like some great ghost from an earlier era of American capitalism -- the era when America made its own goods and the world's as well, and when its workers were decently paid for their otherwise unrewarding jobs. One of the only two major mills located west of the Rockies, the factory was built in 1942 by Henry Kaiser to provide the steel for his San Francisco Bay shipyard that was turning out Liberty Ships at the rate of one a day; for the aircraft, tank, and truck factories that dotted the Pacific Coast; and for the postwar housing and office boom that was yet to come. Kaiser was widely regarded as Franklin Roosevelt's favorite capitalist. He thrived on government contract work, welcomed unions into his workplaces, instituted some of the first employment-based health benefits, constructed worker housing, and built a manufacturing and hospital (Kaiser Permanente) empire, some of which survives to this day.

In the 1970s and early 1980s, however, the new owners and managers of the steel mill declined to invest in new technology, and the plant was shuttered in 1983. But during its heyday, the mill was celebrated for its labor-management relations, and its workers, as Fontana native Mike Davis recounts in his noir Los Angeles history City of Quartz, had the time and wherewithal to join (often company-sponsored) bowling, hunting, fishing, boxing, rock-climbing, auto-racing, tennis, and golf teams, not to mention the local drama club.

The intergenerational downward mobility of the Fontana working class -- from a unionized, high-wage, permanent work force in an economy dominated by high-end manufacturing to a nonunion, low-wage, temporary one in an economy dominated by low-end retailing -- encapsulates the story of the American working class over the past 35 years. Now, amid some of the nation's highest rates of layoffs and foreclosures, "the crappy job system out here," in the words of Change to Win's campaign director, Nick Allen, "is coming apart." Whether the young union organizers can do what their Depression-era forebears did -- channel the anger of dispossessed workers into a groundswell of demands for a decent economic order, and that groundswell into a powerful union -- depends on a Congress that may yet reform labor law, on the unions funding and guiding the campaign, on the organizers themselves, and, as ever, on workers figuring the calculus between risk and hope and who may decide, as workers sometimes do, that they have precious little to lose.

This is the first of two articles by Harold Meyerson on warehouse organizing; the second will appear in our October 2009 issue.